Trade

May argued against the UK joining the European Economic Area (EEA), mirroring the Norway-EU trade model, primarily as the UK would have to adopt new EU rules fully and automatically – thus violating the call for sovereignty that has underpinned Brexit.

May also shunned the idea of a free trade agreement resembling the one recently negotiated between the EU and Canada, despite lauding the deal, due to the UK’s unprecedented position of having the “same rules and regulations as the EU”.

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She said: “We do not start with a blank sheet of paper, like other external partners negotiating a free trade deal from scratch have done.” She reasoned that this harmony of regulations should provide the platform upon which a new and unique trade deal can be built.

Rejecting any trade models based on the EU’s pre-existing external relationships, May instead championed a “an ambitious economic partnership” that is “creative” as well as “practical”, although did not shed light on the particulars of such a partnership.

She also articulated her vision for the UK to be a “global, free-trading nation, able to chart our own way in the world.”

Transitional period

A crucial proposition of the speech was May’s concession that the UK will need to maintain the existing structure of EU rules and regulations for a time-limited transitional period following 29 March 2019, when the UK officially ceases to be a member of the EU.

The transitional period, which she estimated would last two years, would see the UK remaining part of the single market and EU security measures, and being bound to the EU budget and the European Court of Justice (ECJ).

The prime minister did not confirm at what cost the proposed two-year transitional period would come, but a sum of €20bn (£18bn) has been widely quoted.

May argued that such a transition was necessary to ensure a smooth and orderly exit and avoid a cliff edge scenario. She added that people, businesses and public services should only have to adapt to new changes once.

She clarified that during this period EU citizens would be able to come and live and work in the UK, but that a registration system will be implemented.

In response to this proposition, Karen Briggs, head of Brexit at KPMG said: “Business will welcome the Prime Minister’s proposals around transition, something they have consistently asked for.”

“However no one can afford to take their foot off the gas. There is a huge amount of preparation to be made at a national and individual business level. Both the public and private sector must make use of this potential window.

She added: “All eyes will now turn to whether the EU views the Prime Minister’s proposals as sufficient to move the talks forward in October. Until both sides sign up to the proposals, cliff edge remains a real possibility.”

Divorce bill

Countering the commotion and uncertainty surrounding the UK’s potential “divorce bill”, May aimed to reassure her European counterparts by promising: “I do not want our partners to fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave.”

The EU operates in multi-year financial frameworks and is currently in the midst of the 2014-2020 budget. May gave assurances that “the UK will honour commitments we have made during the period of our membership.”

While May’s comments attempted to appease EU concerns over the bill, her promises to honour commitments were vague, and aspects of the final settlement, such as the UK’s liability to fund EU pensions, are likely to be contentious.

May also expressed a desire to maintain participation in “specific policies and programmes which are greatly to the UK and the EU’s joint advantage, such as those that promote science, education and culture – and those that promote our mutual security.”

Citizen’s rights

The speech contained reassurances from May that EU citizens living in the UK are welcome and wanted, and promised to protect their rights as they currently stand.

However, May acknowledged: “Over time the rights of EU citizens in the UK and UK citizens overseas will diverge. I want to incorporate our agreement fully into UK law and make sure the UK courts can refer directly to it.”

She added: “Where there is uncertainty around underlying EU law, I want the UK courts to be able to take into account the judgments of the European Court of Justice with a view to ensuring consistent interpretation.”

At the crux of this is the issue of whether UK courts or the ECJ will be the ultimate arbiter of any disputes. This is likely to continue to be a contentious issue in Brexit negotiations.

Northern Ireland border

The prime minister also restated the importance of maintaining an open border between Northern Ireland and Ireland.

She stated: “We and the EU have committed to protecting the Belfast Agreement and the Common Travel Area and, looking ahead, we have both stated explicitly that we will not accept any physical infrastructure at the border.”

While DUP leader Arlene Foster praised Theresa May’s aims to maintain “positive relationships with our nearest neighbours”, Sinn Fein leader Gerry Adams criticised the speech for its lack of substance. He said: “Mrs May repeated the same platitudes and language on the Good Friday Agreement and the border that she has used for almost a year. There was no hard proposal or detail.”